In a final nudge on regulatory reform Thursday, President Obama urged lawmakers and bankers to put politics aside and support the legislation.
The president refuted criticisms and touted key elements of the bill, including new resolution authority for government officials, limits on derivatives and tougher consumer protections.
"We've seen misleading arguments and attacks designed not to improve the bill but to weaken or kill it," the president said, according to a text of his speech prepared for delivery. "And we've seen a bipartisan process buckle under the weight of these withering forces, even as we have produced a proposal that is by all accounts a common-sense, reasonable, non-ideological approach to target the root problems that led to the turmoil in our financial sector."
Obama said that he still believed "we can and must put this kind of cynical politics aside. That's why I am here today. We will not always see eye-to-eye. We will not always agree. But that does not mean we have to choose between two extremes."
The president's push comes as the bill moves to a Senate vote planned for next week.
Obama said he was encouraged by Sen. Charles Grassley's decision on Wednesday to vote for derivatives legislation — the first time a GOP member has voted for any piece of regulatory reform. He urged other Republicans to follow suit.
"I was encouraged to see a Republican senator join with Democrats this week in moving forward on this issue," Obama said in a speech in New York. "For without action, we'll continue to see what amounts to highly leveraged, loosely monitored gambling in our financial system, putting taxpayers and the economy in jeopardy. And the only people who ought to fear this kind of oversight and transparency are those whose conduct will fail its scrutiny."
Specifically, the president focused on the main components of the bill — resolution authority, the Volcker Rule, derivatives regulation, consumer protection and executive compensation.
He took issue with Republicans' claims that resolution authority for large systemic companies is the equivalent of a bailout.
"What is not legitimate is to suggest that we're enabling or encouraging future taxpayer bailouts, as some have claimed," he said. "That may make for a good sound bite, but it's not factually accurate. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. Only with reform can we avoid a similar outcome in the future. A vote for reform is a vote to put a stop to taxpayer-funded bailouts. That's the truth."
He also endorsed the controversial Volcker Rule to limit the size and activities of banks. He said this change will make the financial system stronger and more competitive.
The president said shoring up consumer protections is "absolutely necessary."
"Because this financial crisis wasn't just the result of decisions made in the executive suites on Wall Street; it was also the result of decisions made around kitchen tables across America, by folks taking on mortgages and credit cards and auto loans," he said. "And while it's true that many Americans took on financial obligations they knew — or should have known — they could not afford, millions of others were, frankly, duped. They were misled by deceptive terms and conditions, buried deep in the fine print."
Obama reiterated his call for a bank tax to recoup losses from the Troubled Asset Relief Program. Such a proposal is not in regulatory reform bills but has been gaining momentum as separate legislation.
"To save the entire economy from an even worse catastrophe, we had to deploy taxpayer dollars," he said. "And although much of that money has now been paid back — and my administration has proposed a fee to be paid by large financial firms to recover the rest — the American people should never have been put in that position in the first place."
Obama offered no specifics on the direction of these proposals, including where the consumer agency should be housed or the level of derivatives regulation. While the speech was sparse on details, it was a significant opportunity for the president to prod the financial community to get behind his bill.
"But I am here today because I want to urge you to join us, instead of fighting us in this effort," Obama said. "I am here because I believe that these reforms are, in the end, not only in the best interest of our country, but in the best interest of our financial sector."